filed april 1, 2010 - courtswv.gov

_____________

_____________

___________________________________________________________________

____________________________________________________________________

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

January 2010 Term

FILED April 1 2010

No 35223 released at 1000 am RORY L PERRY II CLERK

SUPREME COURT OF APPEALS OF WEST VIRGINIA

BERNARD BOGGS Plaintiff

V

CAMDEN-CLARK MEMORIAL HOSPITAL CORPORATION Defendant

V

BERNARD BOGGS Plaintiff

V

RICHARD A HAYHURST AND CINCINNATI INSURANCE COMPANY

Defendants

Certified Questions from the Circuit Court of Wood County Honorable Thomas C Evans III Special Judge

Civil Action Nos 05-C-527 and 06-C-401

CERTIFIED QUESTIONS ANSWERED

Submitted March 10 2010 Filed April 1 2010

Ancil G Ramey Steptoe amp Johnson Charleston West Virginia Attorney for Defendant Richard A Hayhurst

Christopher J Regan Bordas amp Bordas Wheeling West Virginia Attorney for Plaintiff Bernard Boggs

Adam Barnes Walsh Collin amp Blackmer Pittsburgh Pennsylvania Attorney for Defendant Cincinnati Insurance Co

Dino S Colombo Richard W Stuhr Colombo amp Stuhr Morgantown West Virginia Attorney for Defendant Camden-ClarkMemorial Hospital

CHIEF JUSTICE DAVIS delivered the Opinion of the Court

SYLLABUS BY THE COURT

1 The term ldquoprofessional servicesrdquo contained in a commercial general

liability policy when not otherwise specifically defined denotes those services rendered by

someone with particularized knowledge or skill in his or her chosen field

2 As a general matter in the absence of policy language to the contrary

a professional services exclusion in a commercial general liability policy applies to claims

asserted by an insuredrsquos client or a nonclient for harm arising out of professional services

rendered by the insured

3 The term ldquoprofessional liabilityrdquo contained in a personal umbrella policy

that excludes a personal injury arising out of any act malpractice error or omission

committed by an insured in the conduct of any profession means those services rendered by

an insured with particularized knowledge or skill in his or her chosen field


a professional liability exclusion in a personal umbrella policy applies to claims asserted by

an insuredrsquos client or a nonclient for harm arising out of professional services rendered by

the insured

i

Davis Chief Justice

This matter comes before this Court upon a request from the Circuit Court of

Wood County to answer four certified questions The parties to this proceeding are Richard

A Hayhurst (hereinafter ldquoMr Hayhurstrdquo) defendant Cincinnati Insurance Company

(hereinafter ldquoCICrdquo) defendant and Bernard Boggs (hereinafter ldquoMr Boggsrdquo) plaintiff By

order dated March 20 2009 the circuit court certified the following four questions to this

Court

1 Do allegations of a malicious prosecution suit against the insured an attorney by a clientrsquos former opponent in a previous action defended by the insured fall within the scope of a commercial general liability policy of [sic] personal umbrella liability policy issued to the attorney wherein the term ldquopersonal injuryrdquo is defined to include ldquomalicious prosecutionrdquo

Answer Yes X No

2 Under a liability insurance policy wherein the term ldquopersonal injuryrdquo is defined to include ldquomalicious prosecutionrdquo is a malicious prosecution suit against the insured an attorney by a clientrsquos former opponent in a previous action defended by the insured excluded by policy language that states that ldquoThis insurance does not apply to lsquopersonal injuryrsquo due to rendering professional services unless professional liability coverage has been endorsed hereon or stated in the Declarations This includes but is not limited to (1) Legal accounting or advertising servicesrdquo

Answer Yes X No

3 Under a personal umbrella liability insurance policy wherein the term ldquopersonal injuryrdquo is defined to include ldquomalicious prosecutionrdquo is a malicious prosecution suit against the insured an attorney by a clientrsquos former opponent in a previous action

1

defended by the insured excluded by policy language that states that ldquoThis insurance does not apply to lsquopersonal injuryrsquo arising out of any act malpractice error or omission committed by any lsquoinsuredrsquo in the conduct of any profession or lsquobusinessrsquo even if covered by lsquounderlying insurancersquordquo

Answer Yes X No

4 Do the ldquoprofessional servicesrdquo exclusion of the business owners package policy andor the ldquoprofessional liabilityrdquo exclusion of the personal umbrella liability policy apply when the claim asserted against the policyholder for which coverage is sought is not made by a person or entity to whom the policyholder rendered professional services but by a third-party to whom no professional services were rendered

Answer Yes X No

Upon review of the partiesrsquo briefs arguments and the record we answer the

certified questions as reformulated and remand this matter for further proceedings

consistent with this opinion

2

I

FACTUAL AND PROCEDURAL HISTORY

This case relates to a medical malpracticewrongful death lawsuit filed by Mr

Boggs against Camden-Clark Memorial Hospital and others in 20031 During that

proceeding Camden-Clark was represented by Mr Hayhurst While the case was pending

Camden-Clark filed two unsuccessful counterclaims against Mr Boggs As a result of the

unsuccessful counterclaims Mr Boggs in 2005 filed a second lawsuit against Camden-

Clark alleging a claim for malicious prosecution as a result of the two unsuccessful

counterclaims2

In 2006 Mr Boggs filed a separate lawsuit against Mr Hayhurst That lawsuit

also alleged claims for malicious prosecution due to the filing of the two unsuccessful

counterclaims On August 8 2006 Mr Hayhurst sent a letter to his legal malpractice insurer

Liberty Insurance Underwriters informing the insurer of the suit against him In that letter

Mr Hayhurst stated

This claim arises from my services as trial counsel for Camden-Clark Memorial Hospital Corporation in two separate actions for wrongful death arising from alleged medical malpractice During the course of those two cases the

1See Boggs v Camden-Clark Memrsquol Hosp Corp 216 W Va 656 609 SE2d 917 (2004) (addressing pretrial procedural issues in the case)

2The medical malpracticewrongful death lawsuit was resolved bya juryverdict in favor of Mr Boggs in March 2006

3

Hospital filed counterclaims against the plaintiff due to lack of foundation for proceeding against the Hospital When applicable law changed the counterclaims were dismissed Notwithstanding the dismissal of the counterclaims the plaintiff sued the Hospital in 2005 for abuse of civil process and malicious prosecution That action pends

The enclosed civil action is identical in form and substance to the 2005 action brought by Mr Boggs against the Hospital and makes the same charges against me by virtue of my actions as trial counsel for the Hospital

Please docket this claim and call me right away to discuss the identity of counsel to be assigned to me

By letter dated September 6 2006 Liberty Insurance notified Mr Hayhurst that it would

provide defense counsel for him but that it was reserving its right to deny coverage based

upon any applicable exclusion under its policy Thereafter on February 9 2007 Mr

Hayhurst sent a letter to CIC requesting coverage under two policies it issued to him a

commercial general liability policy and a personal umbrella liability policy CIC denied

coverage under the two policies

Eventually the malicious prosecution actions against Camden-Clark and Mr

Hayhurst were consolidated It appears that after the consolidation Mr Boggs amended his

complaint in 2008 to add CIC as a defendant The claim against CIC was for declaratory

judgment on the issue of whether the two insurance policies it issued to Mr Hayhurst

4

covered the malicious prosecution claims asserted against Mr Hayhurst3 After CIC was

brought into the case Mr Hayhurst filed a cross-claim against CIC that involved the issue

of insurance coverage4

Subsequent to the filing of the amended complaint Mr Boggs Mr Hayhurst

and CIC moved for summary judgment on the insurance coverage issue By order entered

March 20 2009 the circuit court denied the summary judgment motions by Mr Boggs and

Mr Hayhurst In that same order the circuit court found the two insurance policies at issue

did not provide coverage for the claims asserted against Mr Hayhurst Therefore the circuit

court granted summary judgment in favor of CIC On the same day the circuit court also

entered an order certifying the aforementioned four questions to this Court5

3See Syl pt 3 Christian v Sizemore 181 W Va 628 383 SE2d 810 (1989) (ldquoAn injured plaintiff may bring a declaratory judgment action against the defendantrsquos insurance carrier to determine if there is policy coverage before obtaining a judgment against the defendant in the personal injury action where the defendantrsquos insurer has denied coveragerdquo)

4Additionally CIC filed a declaratory judgment action against Mr Hayhurst in federal court The record does not indicate the disposition of the federal case

5The procedural manner in which this case was brought to this Court is somewhat confusing Insofar as the circuit court granted summary judgment in favor of CIC and dismissed the amended complaint against it with prejudice the court should have made the summary judgment order a final appealable order under Rule 54(b) of the West Virginia Rules of Civil Procedure ldquoUnder 54(b) an order granting a motion to dismiss as to some but not all parties is a final appealable judgment if the order expressly states that it is a final order and contains an express determination that there is no just reason for delay in final adjudication of the rights and liabilities in questionrdquo Franklin D Cleckley Robin J Davis

(continued)

5

II

STANDARD OF REVIEW

Here we are asked to respond to certified questions from the circuit court We

have held that ldquo[t]he appellate standard of review of questions of law answered and certified

by a circuit court is de novordquo Syl pt 1 Gallapoo v Wal-Mart Stores Inc 197 W Va 172

475 SE2d 172 (1996) We would also note that to the extent we are required to examine

the language of insurance policies to answer the certified questions we have held that ldquo[t]he

interpretation of an insurance contract including the question of whether the contract is

ambiguous is a legal determination that shall be reviewed de novo on appealrdquo Syl pt

2 in part Riffe v Home Finders Assocs Inc 205 W Va 216 517 SE2d 313 (1999)

III

DISCUSSION

This case presents four certified questions from the Circuit Court of Wood

County for our consideration and determination However based upon this Courtrsquos inherent

5(continued) amp Louis J Palmer Jr Litigation Handbook on West Virginia Rules of Civil Procedure sect 54(b) at 1072 (3d ed 2008) Because Rule 54(b) was the most appropriate rule for bringing this case to this Court as an appeal of a summary judgment order the circuit court should not have relied upon the certification statute to have this Court perform an indirect review of its summary judgment dismissal order

6

authority6 we have determined that the most efficient way to resolve these questions is to

reformulate and consolidate them into a single question as follows

Does the commercial general liability policy or the personal umbrella liability policy issued by CIC to Mr Hayhurst cover the claims for malicious prosecution asserted by Mr Boggs against Mr Hayhurst

When deciding cases concerning the language employed in an insurance policy

we look to the precise words employed in the policy of coverage As a general rule we

accord the language of an insurance policy its common and customary meaning That is

ldquo[l]anguage in an insurance policy should be given its plain ordinary meaningrdquo Horace

Mann Ins Co v Adkins 215 W Va 297 301 599 SE2d 720 724 (2004) (internal

quotations and citation omitted) We accept the plain meaning of the policy provisions under

review without interpretation or construction except where ambiguity warrants such further

consideration of the policy language ldquolsquoWhere the provisions of an insurance policy contract

6We previously have held that this Court has the authority to reformulate questions certified to it for resolution

When a certified question is not framed so that this Court is able to fully address the law which is involved in the question then this Court retains the power to reformulate questions certified to it under both the Uniform Certification of Questions of Law Act found in W Va Code 51-1A-1 et seq and W Va Code 58-5-2 [1967] the statute relating to certified questions from a circuit court of this State to this Court

Syl pt 3 Kincaid v Mangum 189 W Va 404 432 SE2d 74 (1993)

7

are clear and unambiguous they are not subject to judicial construction or interpretation but

full effect will be given to the plain meaning intendedrsquo Syllabus Keffer v Prudential Ins

Co 153 W Va 813 172 SE2d 714 (1970)rdquo Syl pt 2 West Virginia Fire amp Cas Co v

Stanley 216 W Va 40 602 SE2d 483 (2004) On the other hand ldquo[w]henever the

language of an insurance policy provision is reasonably susceptible of two different

meanings or is of such doubtful meaning that reasonable minds might be uncertain or

disagree as to its meaning it is ambiguousrdquo Syl pt 1 Prete v Merchants Prop Ins Co of

Indiana 159 W Va 508 223 SE2d 441 (1976) Further ldquo[w]here a provision of an

insurance policy is ambiguous it is construed against the drafter especially when dealing

with exceptions and words of limitationrdquo Payne v Weston 195 W Va 502 507 466 SE2d

161 166 (1995) (citing Syl pt 1 West Virginia Ins Co v Lambert 193 W Va 681 458

SE2d 774 (1995))

In addressing the reformulated question we will separately review the

language of the commercial general liabilitypolicyand the personal umbrella liability policy

8

A Commercial General Liability Policy

The first issue we address is whether the commercial general liability policy

provides coverage for the malicious prosecution claims asserted against Mr Hayhurst7 The

relevant provisions of the policy are as follows8

POLICY COVERAGES[9]

In return for the payment of the premium and subject to all other terms of this policy we agree with you to provide the insurance as stated in this policy

Section IndashProperty

Business Personal Property Limit of Insurance $ 40000 9 Actual Cash Value Replacement Cost

7While we refer to the policyas a commercial general liabilitypolicy the policy is actually styled as a Businessowners Package Policy

8Mr Hayhurst had two commercial general liability policies that may have overlapped the claims made by Mr Boggs One policy covered the period May 20 2002 to May 20 2005 The other policy covered the period May 20 2005 to May 20 2006 Although the record contains the Declaration page for both policies the record has only one copy of an actual policy Insofar as none of the parties have argued that the language from the policy provided in the record differs from the omitted policy we assume that the relevant language for both policies was essentially the same Also Mr Hayhurst attached to his reply brief and relies upon a copy of a policy that actually covered the period May 20 2006 to May 20 2007 Because the relevant terms of the policy attached to Mr Hayhurstrsquos reply brief and the policy relied upon by the circuit court are exactly the same though organized differently it is of no moment as to which policy is relied upon

9We are relying upon what appears to be the policy that covered the period May 20 2002 to May 20 2005

9

OPTIONAL COVERAGESndashCoverage is afforded only where an entry is made in the boxes below

9 Equipment Breakdown 9 Tenantrsquos Glass 9 Employment Practices Liability

9 Professional Liability 9 Earthquake Coverage 9 Umbrella Liability

A Coverages

1 Business Liability

a We will pay those sums that the insured becomes legally obligated to pay as damages because of ldquopersonal injuryrdquo to which this insurance applies We will have the right and duty to defend the insured against any ldquosuitrdquo seeking those damages However we will have no duty to defend the insured against any ldquosuitrdquo seeking damages for ldquopersonal injuryrdquo to which this insurance does not apply

b This insurance applies

(2) To ldquopersonal injuryrdquo only if

(a) ldquoThe personal injuryrdquo is caused by an offense arising out of your business

B Exclusions

1 Applicable to Business Liability Coverage

This insurance does not apply to

10

j Professional Services

ldquo[P]ersonal injuryrdquo caused by the rendering or failure to render professional services unless professional liability coverage has been endorsed hereon or stated in the Declarations This includes but is not limited to

(1) Legal accounting or advertising services[]

F Liability and Medical Expenses Definitions

13 ldquoPersonal injuryrdquo means injury other than ldquobodily injuryrdquo arising out of one or more of the following offenses

a False arrest detention or imprisonment

b Malicious prosecution[]

(Footnote added)

Essentially three arguments are raised by Mr Hayhurst and Mr Boggs as to

why the above policy language provides coverage (1) ambiguity in the meaning of

professional services (2) reasonable expectation of coverage and (3) the exclusion is limited

to a claim against Mr Hayhurst by one of his clients We will examine each argument

individually

11

(1) The term ldquoprofessional servicesrdquo in the commercial general liability

policy Mr Hayhurst and Mr Boggs contend that the ldquoprofessional servicesrdquo exclusion is

ambiguous because that term is undefined To support this argument Mr Hayhurstrsquos brief

relies upon the decision in Johnson ex rel Estate of Johnson v Acceptance Insurance Co

292 F Supp 2d 857 (ND W Va 2003)

In Johnson the plaintiff (estate of decedent) filed a first-party bad faith action

as an assignee against an insurer for refusing to defend and provide coverage for its insured

(assignor) in the underlying action filed against the insured by the plaintiff10 The parties

filed various pretrial motions One of the pretrial motions required the court to determine

whether the term ldquoprofessional servicesrdquo found in the applicable policy was ambiguous in

the context of the facts of the case The court addressed the issue as follows

[T]his Court finds that the services rendered to Mr Johnson at and just prior to the time of his injuries were not professional services to which the policy exclusion would then apply This Court finds that the services rendered to plaintiffrsquos decedent while he was under BHArsquos care were merely supervisory and custodial in nature Here there is no clear indication in the record to suggest that the plaintiffrsquos decedent had previously received services rendered by a medical or psychological professional during the time he was living at the Kountry Kove apartments or on the day he was injured However even if there is such evidence there is no indication

10The underlying case was a wrongful death action against the insured The insured and plaintiff entered into a settlement agreement in which the insured assigned its cause of action against the insurer

12

in the record that the rendering or failure to render a professional service was causally connected to the accident

Moreover the term ldquoprofessional servicesrdquo is not defined within the policy Case law supports the proposition that the term ldquoprofessional servicesrdquo denotes those services rendered by someone with particularized knowledge or skill in his or her chosen field In light of this definition of ldquoprofessional servicesrdquo the Court finds that plaintiffrsquos decedentrsquos injuries were not the cause of the failure to render any type of professional service as that term is commonly understood and legally defined

In any event since the policy does not provide an explicit definition of ldquoprofessional servicesrdquo this Court finds that the term ldquoprofessional servicesrdquo in this policy is ambiguous Ambiguities in insurance policies are construed against the insurer Therefore since that term is ambiguous it must be construed against Acceptance

Johnson 292 F Supp 2d at 866 (internal citations omitted)

The determination in Johnson that the term ldquoprofessional servicesrdquo was

ambiguous is not dispositive under the facts of the instant case Moreover the opinion in

Johnson is flawed It found that the conduct in the case did not involve rendering

professional services as that term is commonly understood Yet the opinion went on to

unnecessarily find the term ambiguous in the policy Mr Hayhurstrsquos reliance on Johnson is

misguided

13

A case squarely on point with the facts of the instant case is Harad v Aetna

Casualty and Surety Co 839 F2d 979 (3rd Cir 1988) In that case a Pennsylvania attorney

Charles Harad was sued by a plaintiff for malicious prosecution which action arose out of

a prior case in which Mr Harad had represented a defendant insurer being sued by the

plaintiff The malicious prosecution claim was due to Mr Harad ldquosigning a verification to

an answer and counterclaim in which [the insurer] asserted that [plaintiff] lsquoconspired andor

contrived to defraud [insurer] byconcealing andor misrepresenting the fact that the vehiclesrsquo

insured by [insurer] were for personal rather than business userdquo Harad 839 F2d at 980-81

Mr Harad had two policies from different insurers One policy was a commercial general

liability policy which was issued by Aetna Casualty and Surety Company and the other

policy was a professional liability insurance policy which was issued by Home Insurance

Company The commercial general liability policy excluded coverage for professional

services as follows

H PROFESSIONAL LIABILITY EXCLUSION

This insurance does not apply

1 When this policy is issued to a Medical Doctor Dentist Osteopath Veterinarian Nurse Psychologist Chiropractor Funeral Director X-Ray Technician Appraiser Optometrist Optician Attorney or accountant or arising out of the rendering or failure to render any professional service

14

Harad 839 F2d at 983 When Aetna Casualty declined to provide a defense or coverage

Mr Harad and Home Insurance filed a declaratory judgment action against Aetna Casualty

seeking a determination that coverage was included under the commercial general liability

policy After a default judgment was rendered against Aetna Casualty it moved to set aside

the default The federal district court denied the motion to set aside the default on the

following grounds

The district court expressed its view that a malicious prosecution claim was not excluded under the policy because [Mr] Harad had not rendered or failed to render professional services to the party suing him The court also found the exclusion ambiguous in light of the overall policy provisions establishing coverage and construed the ambiguity against the drafter[11]

Harad 839 F2d at 981 (footnote added) The Third Circuit Court of Appeals reversed based

upon the following reasoning

Our interpretation of the applicability of the exclusion is consistent with the policy when examined as a whole which we must also consider Aetnarsquos policy was entitled ldquoBusiness Owners Policy (Deluxe)rdquo which implies that the policy was intended to cover liability arising from the operation of a business The terms of the policy purport to cover such business liability but not professional liability [Mr] Harad and Home argue that [Mr] Haradrsquos business is the practice of law However the practice of law as other similarly regulated professional activity in todayrsquos world has two verydifferent and

11Mr Hayhurstrsquos brief argued that ldquothe policyholder in Harad did not assert that [the professional services] language was ambiguous [therefore] the [appellate] court applied a different standard which does not apply in the instant caserdquo This assertion is not supported by the plain language of the Harad opinion

15

often overlooked componentsndashthe professional and the commercial The professional aspect of a law practice obviously involves the rendering of legal advice to and advocacy on behalf of clients for which the attorney is held to a [sic] certain minimum professional and ethical standards The commercial aspect involves the setting up and running of a business ie securing office space hiring staff paying bills and collecting on accounts receivable etc in which capacity the attorney acting as businessperson is held to the same reasonable person standard as any other Indeed the professional services and the business distinction drawn by the two policies and [Mr] Haradrsquos recognition of the limitations inherent in each is manifested by the fact that [Mr] Harad purchased a separate professional liability policy from Home

Given the dual nature of the practice of law an attorneyrsquos liability for an action should be assessed depending on the particular role he was performing at the time the alleged liability arose For example if an attorney while hosting a real estate closing in his office places his briefcase on the floor and a colleague trips on it is injured and sues him the lawyerrsquos liability would derive not from the rendering of a professional service but rather from his operation of a business Conversely since [Mr] Haradrsquos conduct in this case was not related to his operation of a business but was derived solely from his providing legal services to a client his liability is professional in nature

We are of the opinion that [Mr] Haradrsquos conduct in this case falls squarely within the meaning of the phrase ldquorendering [a] professional servicerdquo as set forth in the professional liability exclusion of the policy and that the exclusion applies and provides a complete defense to plaintiffsrsquo action We therefore will reverse the default judgment and remand The district court will enter judgment in favor of Aetna Each party to bear its own costs

16

Harad 839 F2d at 985 (internal citation omitted)12 See also American Econ Ins Co v

Jackson 476 F3d 620 624 (8th Cir 2007) (ldquoThe professional services exclusion in the

Policy is not ambiguous The terms in the Policy have plain meaning and judicial

construction is unnecessaryrdquo) Western World Ins Co v American amp Foreign Ins Co 180

F Supp 2d 224 231 (D Me 2002) (ldquoI conclude that the term lsquoprofessional servicesrsquo as

used in the Royal policy is not ambiguous As other courts have noted the line between

what constitutes a professional service and what does not is capable of being drawn with

some precisionrdquo) National Ben Franklin Ins Co of Illinois v Calumet Testing Servs Inc

60 F Supp 2d 837 845-46 (ND Ind 1998) (ldquo[W]hen the insured is being sued for taking

actions in the course of providing professional services and where those actions both are

reasonably related to the services being provided and involve the use of (or failure to use)

professional knowledge skill experience or training the lsquoprofessional servicesrsquo exclusion

appliesrdquo (internal quotations and citation omitted))13

12Mr Hayhurst has erroneously asserted that Pennsylvania state courts have rejected the analysis in Harad Mr Hayhurst supported this assertion by citing to the decision in Biborosch v Transamerica Insurance Co 603 A2d 1050 1055 (Pa Super Ct 1992) Biborosch did not reject Harad The decision in Biborosch stated that Harad was factually distinguishable and therefore not applicable See Biborosch 603 A2d at 1055 (ldquoWhile we might agree with the statements of the Harad court in a case that presented the same issue as was presented there we nevertheless do not agree that the Harad courtrsquos observations are apposite to this case Harad did not involve the policy at issue here which contains its own expansive definition of lsquoprofessional servicesrsquo specifically including all acts lsquonecessary or incidentalrsquo to the conduct of the insuredrsquos insurance business and administration in connection therewithrdquo)

13Mr Hayhurst seeks to have this Court reject the analysis by the majority (continued)

17

The determination by the appellate court in Harad that the term ldquoprofessional

servicesrdquo was not ambiguous is in line with this Courtrsquos decision in State Automobile Mutual

Insurance Co v Alpha Engineering Services Inc 208 W Va 713 542 SE2d 876 (2000)

(hereinafter ldquoState Autordquo) In State Auto an insurer filed a declaratory judgment action to

determine whether the professional services exclusion in a policy it issued to its insured (a

coal company) barred coverage in an underlying suit against its insured The circuit court

found that the exclusion applied and the insured appealed The professional services

exclusion at issue in State Auto provided as follows


j ldquoBodily injuryrdquo ldquoproperty damagerdquo ldquopersonal injuryrdquo or ldquoadvertising injuryrdquo due to rendering or failure to render any professional service This includes but is not limited to

(2) Preparing approving or failing to prepare or approve maps drawings opinions reports surveys change orders designs or specifications

(3) Supervisory inspection or engineering services

13(continued) opinion in Harad and adopt the position of the dissenting opinion We decline to do so The dissent in Harad ignored the fact that the attorney in Harad chose to limit the type of coverage he obtained from Aetna Casualty to that of essentially business premises liability Instead he chose to obtain professional liability coverage from a different insurerndashHome Insurance In the final analysis the search for the deepest pocket should never entail wrongfully rewriting the insurance policy terms that the parties agreed upon

18

State Auto 208 W Va at 715-16 542 SE2d at 878-79 This Court determined in State

Auto that the above exclusion was not ambiguous and applied to the case as follows

The exclusion at issue in this case plainly excludes any coverage for ldquo[p]reparing approving or failing to prepare or approve maps drawings opinions reports surveys change orders designs or specificationsrdquo and ldquo[s]upervisory inspection or engineering servicesrdquo The complaint filed by Brock Mining alleges that [the insured] was obligated to provide these professional services and that its agent Alpha was negligent in providing these professional services In sum [the insured] provided the contracted-for professional services to Brock Mining through the use of an agent The language of the exclusion appears to be unambiguous and in accordance with our prior holdings must be applied and not construed

We therefore find that the circuit court did not err in declaring that the professional services exclusion applied to the actions alleged in Brock Miningrsquos complaint The circuit court correctly applied the exclusion to the actions alleged in Brock Miningrsquos complaint and properly concluded that State Auto had no duty to defend or provide coverage under its liability policy for [the insuredrsquos] negligent provision of surveys maps and engineering services to Brock Mining

State Auto 208 W Va at 717 542 SE2d 880 See also Syl pt 4 Webster County Solid

Waste Auth v Brackenrich amp Assocs Inc 217 W Va 304 617 SE2d 851 (2005) (ldquoThe

inclusion in a standard commercial general liability policy of language that excludes

coverage for lsquoprofessional liabilityrsquo is specifically designed to shift the risk of liability for

claims arising in connection with the performance of professional services away from the

insurance carrier and onto the professionalrdquo)

19

In view of the foregoing authorities we now hold that the term ldquoprofessional

servicesrdquo contained in a commercial general liability policy when not otherwise specifically

defined denotes those services rendered by someone with particularized knowledge or skill

in his or her chosen field See Atlantic Lloydrsquos Ins Co of Texas v Susman Godfrey LLP

982 SW2d 472 476-77 (Tex App 1998) (ldquoTo qualify as a professional service the task

must arise out of acts particular to the individualrsquos specialized vocation We do not deem an

act a professional service merely because it is performed by a professional Rather it must

be necessary for the professional to use his specialized knowledge or trainingrdquo)

In the instant proceeding contrary to the position taken by Mr Hayhurst and

Mr Boggs the term ldquoprofessional servicesrdquo used in the policy is not ambiguous Under the

policy in this case there is no coverage for professional services that ldquoinclude[] but [are] not

limited to (1) Legal accounting or advertising servicesrdquo In other words the policy in this

case has expressly defined professional services to include the rendering of legal services14

All of the malicious prosecution allegations against Mr Hayhurst as set out in Mr Boggsrsquo

amended complaint involve the filing of two counterclaims by Mr Hayhurst in the

14Mr Hayhurst has cited to the case of ST Hudson Engineers Inc v Pennsylvania National Mutual Casualty Co 909 A2d 1156 (NJ Super Ct App Div 2006) as purportedly standing for the proposition that ldquo[m]erely because a cause of action arises from a policyholderrsquos business activities does not necessarily trigger the application of a professional services exclusionrdquo This proposition may very well be valid under a factual setting different from the instant case

20

underlying case Mr Hayhurst filed those counterclaims in his capacity as the attorney for

Camden-Clark and as such he was rendering professional services15 In fact in Mr

Hayhurstrsquos letter to his legal malpractice insurer Liberty Insurance he clearly stated that the

malicious prosecution action ldquoarises from my services as trial counsel for Camden-Clark[]rdquo

Accordingly the unambiguous policy language excludes coverage for the professional

services rendered herein

(2) Reasonable expectation of coverage under the commercial general

liability policy Mr Hayhurst and Mr Boggs also argued that Mr Hayhurst had a

ldquoreasonable expectationrdquo of coverage for a malicious prosecution claim because the policy

defined a personal injury as including a claim for malicious prosecution Regarding the

doctrine of reasonable expectations this Court has held

With respect to insurance contracts the doctrine of reasonable expectations is that the objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though

15Mr Hayhurst has cited to the case of Finnie v LeBlanc 856 So 2d 208 (La Ct App 2003) for the proposition that under various circumstances malicious prosecution claims are not subject to professional services exclusions This proposition may very well be true as it was in Finnie where the court determined that a counselorrsquos conduct in falsely accusing the plaintiff in another suit did not arise out of his professional role However this proposition is inapplicable because the claims against Mr Hayhurst arose exclusively out of his legal representation of Camden-Clark See also Atlantic Lloydrsquos Ins Co of Texas v Susman Godfrey LLP 982 SW2d 472 (Tex App 1998) (holding that attorneyrsquos letter to solicit client was not legal service within meaning of policyrsquos professional service exclusion)

21

painstaking study of the policy provisions would have negated those expectations

Syl pt 8 National Mut Ins Co v McMahon amp Sons Inc 177 W Va 734 356 SE2d 488

(1987) abrogated on other grounds by Potesta v United States Fid amp Guar Co 202

W Va 308 504 SE2d 135 (1998)

Mr Hayhurst and Mr Boggs cannot rely on the doctrine of reasonable

expectations This Court has made clear that as a general rule ldquo[i]n West Virginia the

doctrine of reasonable expectations is limited to those instances in which the policy

language is ambiguousrdquo National Mut 177 W Va at 742 356 SE2d at 49616 The fact

that the policy defined personal injury as including a claim for malicious prosecution did not

make the policy ambiguous17 It is clear from the recitation of the pertinent language of the

policy quoted in this opinion that the policy was designed to allow an insured like Mr

Hayhurst to pay an additional premium to obtain coverage for professional liability As a

consequence of this option the policy included a provision that would provide coverage for

a malicious prosecution claim for an insured who purchased professional liability coverage

16But see Luikart v Valley Brook Concrete amp Supply Inc 216 W Va 748 613 SE2d 896 (2005) (per curiam) (recognizing applicability of doctrine of reasonable expectations to clear and unambiguous policy language in extremely limited circumstances)

17See American amp Foreign Ins Co v Colonial Mortgage Co Inc 936 F2d 1162 1169 (11th Cir 1991) (Hatchett J concurring) (ldquoThe essential purpose of an exclusion is to limit the scope of coverage granted in the coverage section of the policy By definition any exclusion is in direct conflict with the coverage section of the policy but this conflict does not make the policy ambiguousrdquo)

22

The Declarations page of the policy clearly shows that Mr Hayhurst did not purchase

coverage for professional liability from CIC Moreover Mr Hayhurst has not paid a

premium for professional liability coverage under the policy18 See American Intrsquol Bank v

Fidelity amp Deposit Co 49 Cal App 4th 1558 1574 (1996) (ldquoHad these insureds desired to

obtain a professional liability policy to protect them from charges resulting from the

performance of professional services such insurance could have been obtained The

premium would likely have been higher than the premium charged here for general

business liability insurancerdquo (internal quotations and citation omitted)) Under these facts

the doctrine of reasonable expectations is simply not applicable

18It is disingenuous for Mr Hayhurst to assert that he reasonably believed that he had professional liability coverage under the CIC policy when he specifically purchased such coverage from Liberty Insurance

23

(3) The professional liability exclusion in the commercial general liability

policy Mr Hayhurst and Mr Boggs contend that the policyrsquos professional services

exclusion applies only to a claim asserted against Mr Hayhurst by one of his clients19 At

least two courts have squarely addressed this argument and have rejected the same

19In conjunction with this argument Mr Hayhurst has cited the case of Utica National Insurance Co of Texas v American Indemnity Co 141 SW2d 197 (Tex 2004) as standing for the proposition that a professional services exclusion does not apply when an insured does not breach any standard of professional care Mr Hayhurst has contended that the exclusion in this case should not apply because he did not breach any professional standard of care to Mr Boggs Further Mr Hayhurst asserts that our holdings in Syllabus points 2 and 3 of Clark v Druckman 218 W Va 427 624 SE2d 864 (2005) do not allow an action against an attorney by a nonclient for breach of a professional standard of care This Court held the following in Syllabus points 2 and 3 of Clark

2 An attorney for a party in a civil lawsuit does not owe a duty of care to that partyrsquos adversary in the lawsuit such that the adversary may assert a cause of action for negligence against the opposing attorney

3 The litigation privilege is generally applicable to bar a civil litigantrsquos claim for civil damages against an opposing partyrsquos attorney if the alleged act of the attorney occurs in the course of the attorneyrsquos representation of an opposing party and is conduct related to the civil action

218 W Va 427 624 SE2d 864 Mr Hayhurstrsquos brief neglected to mention that the decision in Clark recognized an exception to the litigation privilege Clark stated ldquo[w]here an attorney files suit without reasonable or probable cause with the intent to harm a defendant we do not believe the litigation privilege should insulate him or her from liability for malicious prosecutionrdquo Clark 218 W Va at 434 624 SE2d at 871 Thus it is clear that under Clark a nonclient may sue an attorney for malicious prosecution Moreover the issue of whether Mr Boggs can sue Mr Hayhurst is not before this Court Our concern is CICrsquos obligation to provide coverage for the claims

24

The argument raised by Mr Hayhurst and Mr Boggs was rejected by the court

in Harad supra as follows

In this case Harad was sued specifically because he had signed a verified complaint on behalf of his client The district court felt that this action on the part of Harad should not be considered a ldquorendering or failure to render [a] professional servicerdquo Determinative for the court below was the fact that ldquoMr Harad neither rendered nor failed to render any professional service to the [party] who is now suing himrdquo Thus the district court was unwilling to accept that ldquoprofessional liabilityrdquo can ever arise out of an attorneyrsquos activities with anyone other than his own client

In examining the character of the conduct alleged to be actionable in this case it appears to us that the nature of the services rendered by Harad was purely professional Harad drafted signed and filed on behalf of [his client] an answer and counterclaim which conduct in turn exposed him to liability Clearly these acts are professional in nature and go to the heart of the type of services an attorney provides to his clients Indeed Harad would not have been legally able to sign the answer and counterclaim (and thereby expose himself to liability) had he not been a licensed attorney acting on behalf of his client Since Haradrsquos liability in this case flowed directly from his performance of a professional activity and as the policy excluded coverage for any liability arising from the ldquorendering of anyprofessional servicerdquo the exclusion clearly obviates any duty to defend and indemnify

Harad 839 F2d at 983-85

The issue of a claim for malicious prosecution by a nonclient against an

attorney was also addressed in Vogelsang v Allstate Insurance Co 46 F Supp 2d 1319

25

(SD Fla 1999) In that case a Florida attorney was sued by a nonclient for inter alia

malicious prosecution as a result of the attorneyrsquos conduct in a prior suit against the

nonclient The attorney had a Business Insurance Policy The insurer denied coverage on

the grounds that the insurance policy excluded coverage for personal injuries arising out of

the rendering of or failure to render professional services The attorney filed a declaratory

judgment action seeking to determine whether coverage existed The attorney argued that

the professional services exclusion only applied to claims brought against him by his clients

The federal district court in rendering summary judgment in favor of the insurer disagreed

with the attorney as follows

Several courts in other jurisdictions have considered and rejected the argument that the professional services exclusion does not apply where the underlying complaint alleges liability and injuries to a non-client Reasoning that nothing in the language of the professional services exclusion limits the exclusion to claims brought by clients of the professional these courts have refused to impose a limitation on the term ldquoprofessional servicerdquo that is not set forth in the policy itself

The professional aspect of a law practice obviously involves the rendering of legal advice to and advocacy on behalf of clients for which the attorney is held to a certain minimum professional and ethical standards [sic] The commercial aspect involves the setting up and running of a business ie securing office space hiring staff paying bills and collecting on accounts receivable etc in which capacity the attorney acting as businessperson is held to the same reasonable person standard as any other

26

Given the dual nature of the practice of law an attorneyrsquos liability for an action should be assessed depending on the particular role he was performing at the time the alleged liability arose

In this case the complaint does not allege that [the attorney] committed a negligent or intentional act incidental to running the commercial aspect of his business All of the allegations flow directly from [the attorneyrsquos] professional decisions while rendering legal services to [his client] If the legal services had not been provided no injury would have occurred

The claims brought by [the nonclient] are excluded from the policyrsquos coverage because they fall within the Professional Services Exclusion Accordingly [the attorneyrsquos] Motion for Summary Judgment is denied [the insurerrsquos] Motion for Summary Judgment is granted [The insurer] does not have a duty to [defend] or indemnify [the attorney] on any of the claims

Vogelsang 46 F Supp 2d 1321-23 (internal citations omitted) (quoting Harad 839 F2d at

985)

We agree with the courts in Harad and Vogelsang and hold that as a general

matter in the absence of policy language to the contrary a professional services exclusion

in a commercial general liability policy applies to claims asserted by an insuredrsquos client or

a nonclient for harm arising out of professional services rendered by the insured

27

In this case Mr Boggs was not Mr Hayhurstrsquos client Mr Boggs sued Mr

Hayhurst because of legal services Mr Hayhurst rendered as an attorney to his client

Camden-Clark The commercial general liability policy unambiguously excluded coverage

for harm caused by Mr Hayhurst in rendering professional services and the policy did not

contain any language that limited its exclusion to claims asserted by Mr Hayhurstrsquos clients

In sum the commercial general liability policy issued by CIC does not cover

the malicious prosecution claims brought against Mr Hayhurst by Mr Boggs20

20Mr Hayhurst and Mr Boggs contend that denying coverage in this case renders the commercial general liability policy meaningless Mr Hayhurstrsquos brief has cited to a case which purportedly stands for the proposition that if a professional services exclusion renders a policy meaningless coverage will be afforded See Isle of Palms Pest Control Co v Monticello Ins Co 459 SE2d 318 321 (SC Ct App 1994) (holding that professional services exclusion that applied to inspecting homes and issuing termite letters but not to actual termite exterminating services rendered policy meaningless) We have reviewed the Isle of Palms case and do not disagree with the decision under its limited factual context However we disagree with the argument that the policy in the instant case is meaningless because of the professional services exclusion For example if Mr Boggs had sued Mr Hayhurst because he fell at Mr Hayhurstrsquos office the policy would presumptively apply and CIC would have a duty to defend because that was the type of business liability coverage Mr Hayhurst purchased

28

B Personal Umbrella Liability Policy

The second issue we address is whether the personal umbrella liability policy21

provides coverage for the malicious prosecution claims asserted against Mr Hayhurst The

relevant provisions of the policy are as follows

21ldquoAlthough the terms lsquoexcess insurancersquo and lsquoumbrella policyrsquo have been used interchangeably by some courts they are distinct terms of art within the insurance businessrdquo Tscherne v Nationwide Mut Ins Co No 81620 2003 WL 22724630 at 3 (Ohio Ct App Nov 20 2003) Consequently at this point we should note the distinction that is made between an umbrella policy and an excess liability policy

Both umbrella and excess liability insurance policies serve to augment primary comprehensive general liability insurance coverage Umbrella policies and excess policies serve related but distinct purposes Umbrella policies generally provide the broadest insurance coverage available As such umbrella policies serve dual functions (1) to act as excess insurance in situations where comprehensive general liability or other primary coverage limits have been exhausted and (2) to drop down and pay claims that fall outside of the coverage provided by the insuredrsquos primary insurance program

Like umbrella policies excess policies provide excess insurance in situations where primary limits have been exhausted However excess policies differ from umbrella policies in two significant ways First unlike umbrella policies excess policies do not provide broader insurance coverage than the relevant primary policies Instead excess policies are typically following-form instruments that incorporate by reference the terms of the underlying policies unless there is a specific term to the contrary in the excess policy Second excess policies do not have a drop-down feature whereby they act as primary insurance policies for occurrences not covered by the primary policies

Scottsdale Ins Co v Safeco Ins Co of Am 111 F Supp 2d 1273 1277-78 (MD Ala 2000) (internal citations omitted)

29

7 SCHEDULE A - SCHEDULE OF UNDERLYING INSURANCE

It is agreed by the Named Insured and their ldquorelativesrdquo the following minimum limits of ldquounderlying insurancerdquo are in force as of the inception date of this policy and will be maintained during the term of this policy

Underlying Insurance Underlying Limit

A Automobile Liability Bodily Injury and Property Damage combined $500000 each occurrence

B Comprehensive Personal Bodily Injury Property Damage and Personal

Liability or Homeowners Injury combined $500000 each occurrence

SECTION IndashCOVERAGE

A Insuring Agreement

1 We will provide the insurance described in this policy You agree to pay the premium and to comply with the provisions and conditions of this policy

2 We will pay on behalf of the ldquoinsuredrdquo the ldquoultimate net lossrdquo which the ldquoinsuredrdquo is legally obligated to pay as damages for ldquopersonal injuryrdquo arising out of an ldquooccurrencerdquo to which this insurance applies

a Which is in excess of the ldquounderlying insurancerdquo or

b Which is either excluded or not covered by ldquounderlying insurancerdquo

B Exclusions


30

13 Professional Liability ldquo[P]ersonal injuryrdquo arising out of any act malpractice

error or omission committed by any ldquoinsuredrdquo in the conduct of any profession or ldquobusinessrdquo even if covered by ldquounderlying insurancerdquo

SECTION IVndashDEFINITIONS

I ldquoPersonal injuryrdquo means injury other than ldquobodily injuryrdquo arising out of one or more of the following offenses

4 Malicious prosecution

Mr Hayhurst and Mr Boggs have argued that the term ldquoprofessional liabilityrdquo

in the umbrella policy is ambiguous that the policy is illusory and that the professional

liability exclusion applies only to claims against Mr Hayhurst by one of his clients We will

discuss each of these issues separately

31

(1) The term ldquoprofessional liabilityrdquo in the personal umbrella liability

policy Mr Hayhurst and Mr Boggs contend that the term ldquoprofessional liabilityrdquo is

ambiguous because it is not defined Therefore they argue that the professional liability

exclusion does not apply22 We summarily reject this argument The umbrella policy states

that professional liability is a ldquolsquopersonal injuryrsquo arising out of any act malpractice error or

omission committed by any lsquoinsuredrsquo in the conduct of any profession[]rdquo Under the plain

language of the exclusion the policy does not provide coverage for any act arising out of Mr

Hayhurstrsquos profession ie conduct by him as an attorney Because we find the term

ldquoprofessional liabilityrdquo is on its face ldquosusceptible to only one reasonable interpretation we

find it unambiguousrdquo Carolina Cas Ins Co v Draper amp Goldberg 138 Fed Appx 542

548 (4th Cir 2005) Id (ldquoThe plain and ordinary meaning of the words lsquoprofessional liability

claimrsquo encompasses any type of claim attempting to assert liability against the applicant law

firm arising out of its rendering of legal servicesrdquo) See also Schultheis v Centennial Ins

Co 438 NYS2d 687 688 (NY Sup Ct 1981) (ldquoThe rider agreement defines

lsquoProfessional Liabilityrsquo to mean lsquoinjury arising out of malpractice error or mistake in

rendering and failing to render professional services in the practice of the named insuredrsquos

profession[]rsquordquo)23 Thus we further hold that the term ldquoprofessional liabilityrdquo contained in

22In the final analysis this argument is merely a repeat attempt at challenging the meaning of ldquoprofessional servicesrdquo which we have previously rejected in this opinion

23Mr Hayhurst and Mr Boggs also have argued that because of the ambiguity in the term ldquoprofessional liabilityrdquo Mr Hayhurst had a reasonable expectation of coverage Insofar as we have determined that no ambiguity exists in the term ldquoprofessional liabilityrdquo the doctrine of reasonable expectation does not apply for the reasons set out under the

(continued)

32

a personal umbrella policy that excludes a personal injury arising out of any act malpractice

error or omission committed by an insured in the conduct of any profession means those

services rendered by an insured with particularized knowledge or skill in his or her chosen

field

(2) Whether the personal umbrella liability policy is illusory Mr Hayhurst

and Mr Boggs have also argued that a denial of coverage under the umbrella policy would

in effect make the policy illusory To support this argument Mr Hayhurst cited to the

decision in Davidson v Cincinnati Insurance Co 572 NE2d 502 (Ind Ct App 1991)24

In Davidson the insured sued a defendant over damage to property that the

insured rented to the defendant After that case was resolved the defendant filed a suit

against the insured alleging among other things a claim for malicious prosecution and

slander The insurer filed a declaratory judgment action seeking to have the trial court

determine that coverage did not exist under two property damage policies and two umbrella

23(continued) discussion of the commercial general liability policy See Blake v State Farm Mut Auto Ins Co 224 W Va 317 ___ n6 685 SE2d 895 903 n6 (2009) (ldquoBecause the Court determines that there is no ambiguity in the State Farm policy language at issue there can be no reasonable expectation of insurance coveragerdquo)

24Mr Hayhurst also cited to the decision in Clark-Peterson Co Inc v Independent Insurance Associates Ltd 492 NW2d 675 (Iowa 1992) The court in Clark-Peterson refused to uphold a policy exclusion for ldquodiscriminationrdquo because the parties had agreed to have coverage for discrimination claims The decision in Clark-Peterson is simply not relevant to the instant case

33

policies it had issued to the insured25 The trial court found that coverage did not exist and

granted summary judgment to the insurer The insured appealed On appeal the court found

that coverage did not exist under the two property damage policies even though the policies

defined personal injury as including malicious prosecution and slander because the injury

did not arise out of the operation of the insuredrsquos business However the appellate court

found that coverage existed under the two umbrella policies

The umbrella policy language that was at issue in Davidson involved the

definition of ldquooccurrencerdquo Under the umbrella policy in Davidson an occurrence was

defined as a claim which ldquounexpectedly or unintentionallyrdquo resulted in personal injury The

insurer contended that a claim for malicious prosecution and slander involve intentional acts

therefore injury from such conduct would not be unexpected or unintentional The insured

argued that coverage should be extended because the policy would be rendered meaningless

for any claim that did not involve unexpected or unintentional harm The appellate court in

Davidson agreed with the insured and tersely stated

Provisions in an insurance policy which are unambiguous when read within the policy as a whole but in effect provide only illusory coverage should be enforced to satisfy the reasonable expectations of the insured Since [the insured] could have reasonably expected [the insurer] to defend him in the action brought by Hardin against him in part for malicious prosecution and slander [the insurer] should have to provide a defense for him The trial court erred in granting

25CIC was also the insurer in Davidson

34

summary judgment in favor of [the insurer] and is hereby reversed

Davidson 572 NE2d at 508

The resolution of the umbrella policy issue in Davidson has no bearing on the

facts of this case26 The principle concern in Davidson was that the umbrella policy

essentially denied coverage for any injury that would be expected to occur from any conduct

The court in Davidson found that the broad requirement that an injury be ldquounexpected or

unintentionalrdquo made the policy illusory In the instant proceeding the umbrella policy is not

illusory nor have we been called upon to determine what the definition of ldquooccurrencerdquo

means Under the umbrella policy in this case coverage is presumptively provided to Mr

Hayhurst for conduct causing injury that did not result from his work as an attorney For

example if Mr Hayhurst ldquopersonallyrdquo sued Mr Boggs for any injury Mr Boggs allegedly

caused him and Mr Boggs later filed a malicious prosecution claim arising from Mr

Hayhurstrsquos personal suit the professional liability exclusion simply would not apply In this

situation the umbrella policy would provide coverage if the claim against Mr Hayhurst was

not covered by the underlying insurance policies or sought an amount in excess of the

underlying policies See State Farm Fire amp Cas Ins Co v First Natrsquol Bank of Madison

26Mr Hayhurst also relied on another case that is not relevant to the facts in this case See Insurance Co of N Am v Milberg Weiss Bershad Specthrie amp Lerach No 95 Civ 3722 (LLS) 1996 WL 520902 (SDNY Sept 12 1996) (insurer filed action to reform insurance contracts to include professional services exclusion that parties allegedly contemplated but which was not inserted in policies issued)

35

County 969 F2d 521 525 (7th Cir 1992) (ldquoOne would expect a personal umbrella policy

to give more protection to personal risks than to business risks One would also expect a

significant premium increase if business risks were included in the coveragerdquo) In summary

we find that the personal umbrella liability policy was not illusory and would provide

coverage under the appropriate circumstances

(3) The professional liability exclusion in the personal umbrella liability

policy Finally Mr Hayhurst and Mr Boggs argued that the umbrella policyrsquos professional

liability exclusion should not apply because ldquothere is no question that Mr Boggsrsquo suit seeks

to impose no lsquoprofessional liabilityrsquo on [Mr Hayhurst]rdquo It is further argued that ldquo[t]hrough

its use of the terms lsquoprofessional liabilityrsquo lsquomalpracticersquo lsquoerrorrsquo and lsquoomissionrsquo the

exclusion reasonably conveys that the personal umbrella policy would apply to

lsquoprofessional liabilityrsquo claims for example by Mr Hayhurstrsquos clientsrdquo This argument is

similar to an argument made under the commercial general liability policy discussion27

27 Mr Hayhurst has cited to the definition of medical professional liability under our Medical Professional Liability Act to argue that ldquolsquoprofessional liability insurancersquo is designed to provide a defense and indemnification for claims made by the clients and customers of professionals who allege breach of a professional rather than a common law standard of carerdquo This argument follows no logical reasoning First the umbrella policy is not a professional liability policy Second this Court has expressly recognized that a nonpatient may bring a cause of action against a healthcare provider See Syl pt 5 Osborne v United States 211 W Va 667 567 SE2d 677 (2002) (ldquoThe West Virginia Medical Professional Liability Act W Va Code sect 55-7B-1 et seq permits a third party to bring a cause of action against a health care provider for foreseeable injuries that were proximately caused by the health care providerrsquos negligent treatment of a tortfeasor patientrdquo) Third although the Legislature enacted W Va Code sect 55-7B-9b (2003) (Repl Vol 2008) to limit

(continued)

36

The umbrella policy contains an unambiguous professional liability exclusion

for personal injury that ldquoaris[es] out of any act malpractice error or omission committed by

any lsquoinsuredrsquo in the conduct of any profession[]rdquo (Emphasis added) Nothing in this

exclusion warrants a reasonable belief that it applies only to claims by a professionalrsquos

clients See Tri-Etch Inc v Cincinnati Ins Co 909 NE2d 997 1003 (Ind 2009) (ldquoNothing

in the language of the professional services exclusion limits the exclusion to claims

brought by the clients of the professional ie to first party claims lsquoThe exclusion here

applies to damages or liability ldquodue to any service of a professional naturerdquo and does not

require privity between the insured and the claimantrsquo Erie Ins Group v Alliance Envtl

Inc 921 F Supp 537 542 (SD Ind 1996)rdquo) In this case Mr Boggs has alleged claims

for malicious prosecution that arose out of Mr Hayhurstrsquos conduct as an attorney for

Camden-Clark Consequently the exclusion applies See Royal Ins Co of Am v Medical

Evaluation Specialists No 95-75412 1996 WL 33406032 (ED Mich Oct 10 1996)

(upholding professional services exclusion in personal umbrella policy) St Paul Fire amp

Marine Ins Co v Roach Bros Co 639 F Supp 134 (ED Pa 1986) (same) Moreover

consistent with our holding under the commercial general liability policy we hold that as

27(continued) the decision in Osborne by requiring a nonpatient to establish that his or her harm was caused by willful and wanton or reckless conduct this statute nevertheless provides that ldquo[n]othing in this section shall prevent a derivative claim for loss of consortium arising from injury or death to the patient[]rdquo W Va Code sect 55-7B-9b In sum a nonpatient may sue a healthcare provider under the requirements of the Medical Professional Liability Act even though the healthcare provider did not render any services to the nonpatient Mr Hayhurstrsquos argument is therefore without merit

37

a general matter in the absence of policy language to the contrary a professional liability

exclusion in a personal umbrella policy applies to claims asserted by an insuredrsquos client or

a nonclient for harm arising out of professional services rendered by the insured28

28The final issue raised by Mr Hayhurst and Mr Boggs is that the umbrella policyshould ldquodrop downrdquo to cover the malicious prosecution claims because the underlying automobile and homeowner policies do not provide coverage To support this contention Mr Hayhurst cites to the decision in Duff Supply Co v Crum amp Forster Insurance Co No Civ A 96-8481 1997 WL 255483 (ED Pa May 8 1997) We summarily reject the drop down argument for two reasons First the decision in Duff Supply is inapplicable because it did not involve a professional liability exclusion More importantly in Duff Supply it was determined that certain claims were in fact excluded by the umbrella policy while one claim for bodily injury was not excluded Second an umbrella policy does not automatically drop down In order for an umbrella policy to drop down it must be determined that none of its exclusions apply To the contrary we have ldquodetermined that an enforceable exclusion in the umbrella policy precluded coverage in this caserdquo Allstate Ins Co v Covalt 321 Fed Appx 717 719 (10th Cir 2009) Consequently the exclusion prevents the umbrella policy from dropping down See State Farm Fire amp Cas Ins Co v First Natrsquol Bank of Madison County 969 F2d 521 (7th Cir 1992) (upholding exclusion in personal umbrella policy) Westfield Ins Co v Holland No 07-5496 2008 WL 5378267 (ED Pa Dec 19 2008) (same) Allstate Ins Co v Melton 482 F Supp 2d 775 (SD Miss 2007) (same) RLI Ins Co v Audubon Indem Co No 404CV276-D-B 2007 WL 2979638 (ND Miss Oct 11 2007) (same) American Natrsquol Prop amp Cas Co v Blocker 165 F Supp 2d 1288 (SD Ala 2001) (same) In re San Juan Dupont Plaza Hotel Fire Litig 789 F Supp 1212 (D Puerto Rico 1992) (same) Uhrich v State Farm Fire amp Cas Co 109 Cal App 4th 598 (2003) (same) Abram v United Servs Auto Assrsquon 916 NE2d 1175 (Ill App Ct 2009) (same) Shelter Mut Ins Co v Ballew 203 SW3d 789 (Mo Ct App 2006) (same) Weitz v Allstate Ins Co 642 A2d 1040 (NJ Super Ct App Div 1994) (same) Pielhau v RLI Ins Co 189 P3d 687 (NM Ct App 2008) (same) National Farmers Union Prop amp Cas Co v Kovash 452 NW2d 307 (ND 1990) (same)

38

IV

CONCLUSION

To summarize we answer the questions certified by the Circuit Court of Wood

County as reformulated into a single question as follows


Answer No

Having answered the foregoing certified questions as reformulated we remand this matter

to the Circuit Court of Wood County for further proceedings consistent with this opinion

Certified Questions Answered

39

Ancil G Ramey Steptoe amp Johnson Charleston West Virginia Attorney for Defendant Richard A Hayhurst

Christopher J Regan Bordas amp Bordas Wheeling West Virginia Attorney for Plaintiff Bernard Boggs

Adam Barnes Walsh Collin amp Blackmer Pittsburgh Pennsylvania Attorney for Defendant Cincinnati Insurance Co

Dino S Colombo Richard W Stuhr Colombo amp Stuhr Morgantown West Virginia Attorney for Defendant Camden-ClarkMemorial Hospital

CHIEF JUSTICE DAVIS delivered the Opinion of the Court
















the insured

i

Davis Chief Justice






Court


Answer Yes X No


Answer Yes X No


1


Answer Yes X No


Answer Yes X No




2

I








counterclaims2





Mr Hayhurst stated




3














4














(continued)

5

II

STANDARD OF REVIEW









III

DISCUSSION




6















7












SE2d 774 (1995))



8





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39
















the insured

i

Davis Chief Justice






Court


Answer Yes X No


Answer Yes X No


1


Answer Yes X No


Answer Yes X No




2

I








counterclaims2





Mr Hayhurst stated




3














4














(continued)

5

II

STANDARD OF REVIEW









III

DISCUSSION




6















7












SE2d 774 (1995))



8





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39

Davis Chief Justice






Court


Answer Yes X No


Answer Yes X No


1


Answer Yes X No


Answer Yes X No




2

I








counterclaims2





Mr Hayhurst stated




3














4














(continued)

5

II

STANDARD OF REVIEW









III

DISCUSSION




6















7












SE2d 774 (1995))



8





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39


Answer Yes X No


Answer Yes X No




2

I








counterclaims2





Mr Hayhurst stated




3














4














(continued)

5

II

STANDARD OF REVIEW









III

DISCUSSION




6















7












SE2d 774 (1995))



8





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39

I








counterclaims2





Mr Hayhurst stated




3














4














(continued)

5

II

STANDARD OF REVIEW









III

DISCUSSION




6















7












SE2d 774 (1995))



8





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39














4














(continued)

5

II

STANDARD OF REVIEW









III

DISCUSSION




6















7












SE2d 774 (1995))



8





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39














(continued)

5

II

STANDARD OF REVIEW









III

DISCUSSION




6















7












SE2d 774 (1995))



8





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39

II

STANDARD OF REVIEW









III

DISCUSSION




6















7












SE2d 774 (1995))



8





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39















7












SE2d 774 (1995))



8





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39












SE2d 774 (1995))



8





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39





POLICY COVERAGES[9]







9




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39




A Coverages






B Exclusions



10








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39








(Footnote added)





individually

11





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39





292 F Supp 2d 857 (ND W Va 2003)









12










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39










misguided

13













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39













services as follows




14






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39






following grounds






15




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39




16
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39
















17














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39














18











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39











19

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39

















20














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39














21




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39




W Va 308 504 SE2d 135 (1998)













22











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39











23









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39









24





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39





Harad 839 F2d at 983-85



25












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39












26





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39





985)





27









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39









28









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39









29













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39













B Exclusions


30










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39










31




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39




















(continued)

32




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39




field












33

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39

















34


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39


















35















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39















(continued)

36


















37





38

IV

CONCLUSION




Answer No




39


















37





38

IV

CONCLUSION




Answer No




39





38

IV

CONCLUSION




Answer No




39

IV

CONCLUSION




Answer No




39

filed april 1, 2010 - courtswv.gov

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